New reporting obligations came into effect on 1 July 2009 and these changes will mean that many employers will need to make changes to their payroll systems and to update payment summaries to include reportable employer super contributions.

There are two conditions that determine whether employer super contributions are reportable. They are:

The employee influenced the amount of superannuation contributed for them; and

The contributions are additional to the compulsory contributions made under superannuation guarantee law.

An employee will generally have the capacity to influence the amount of superannuation contributions where they can directly negotiate, or have the option to directly negotiate an employer super contribution in excess of the compulsory contributions that must be paid. This typically occurs when a salary sacrifice arrangement is made and the employee asks that extra super be paid in return for a reduction in salary.

Another common situation is when the employee requests that a bonus be paid as an extra superannuation contribution instead of salary or where employees negotiate a higher rate of superannuation under a collective agreement with the employer.

There are certain situations where contributions in excess of the super guarantee rate of 9% will not need to be reported because of an ongoing and documented employer policy. For example an employer may have a policy of contributing super annuation at the rate of 12% of salary for all its employees and those employees are not able to negotiate a lower contribution rate.

The new rules also require employers to keep records to prove whether or not employees influenced the extra super contributions made on their behalf including:

Information on how reportable super contributions were calculated

Information on how the employee influenced portion of the total employer contribution was calculated;

Information on how the employee's salary was calculated;

Copies of relevant salary sacrifice agreement; and

Copies of relevant employment contracts and industrial agreements

It is important to note that reportable employer super contributions are not included in the employee's gross income. Instead they are shown on employee's payment summaries in the same manner as reportable fringe benefits. Therefore an employee will only be required to disclose the relevant amount on their tax return.

However, the reportable contributions will be included in the income tests for a range of government benefits and obligations including:

Medicare levy surcharge threshold calculation

All dependent tax offsets

Senior Australian tax offset

Pensioners tax offset

Mature age worker tax offset

Super co-contributions

Deduction for personal super contributions

These new reporting rules may therefore ultimately impact on the amount of tax payable by the employee on their final tax assessment.

This information is provided as a guide only and is not intended to constitute advice whether legal or professional. You should obtain appropriate advice concerning your particular circumstances.

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